Long a boring household staple, Clorox bleach has become a must-have commodity in the age of coronavirus, driving shares of Clorox (CLX +1.02%) stock to ever higher highs over the past two months. From the end of February to close-of-trading Friday, Clorox shares have gained 21%, and as we saw in Clorox's fiscal third quarter 2020 earnings report Friday, bleach is a big part of this story.
In fact, bleach basically is the story at Clorox.
Clorox bleach and other disinfectant sales drove earnings at Clorox in Q3. Image source: Clorox.
Consider: Segment by segment, Clorox sales of lifestyle (food, water filtration, personal care, etc.) products grew 10% in the first quarter of 2020, and sales of household products (bags, wraps, cat litter, and so on) grew a bare 2%.
But cleaning products such as Clorox bleach? Those sales exploded 32% higher -- and pre-tax profits in the cleaning division jumped 71%.
As Clorox CEO Benno Dorer summed up the quarter: "Our hearts go out to everyone who has been affected by the COVID-19 pandemic." At the same time, though, "we're privileged to be in a position to serve the public health during this time," he said. Clorox's disinfecting products exhibited "extraordinary growth" in the first quarter, largely because of "the heightened importance of disinfecting products in consumers' lives."
The question now is what will happen if the coronavirus threat wanes in the fourth quarter and beyond?
Not to worry, says the CEO. "Our business was on track to deliver growth for the back half of the fiscal year in line with our expectations, even ahead of the pandemic," he said.
Maybe sales won't grow 32% again (or maybe they will). Either way, Clorox seems pretty sure that full-year sales can grow at least 4% to 6%, and earnings range from $6.70 to $6.90 per share this year -- both numbers well ahead of what Wall Street analysts currently predict.
